Stocks to Watch
Week of January 10
Sonos Inc. (SONO)
First up on the week, let’s watch SONO, the Santa Barbara, California-based wireless speaker company.
Last Thursday, The U.S. International Trade Commission issued an order that Google must stop importing phones, smart home devices, and laptops that are using Sonos’s patented inventions without permission.
The order could eventually help push the companies into an agreement over patent royalties for home audio systems.
This is a clear win for SONO, and something that could improve sentiment for the company and drive shares back up to the $34-$35 range.
At this point, I like buying the SONO April 14, 2022 $30/$35 Call Spread for $2 or less. Plan on selling the trade for a 100% profit or if shares of SONO close below $27.50.
Blackrock Inc. (BLK)
Next up, we’re watching BLK, the New York City-based asset manager.
As of October, the company had more than $2.3 trillion worth of assets under management, making it the largest provider of Exchange Traded Funds (ETFs) in the United States.
And in November, for the first time ever, annual global net inflows into ETFs surpassed $1 trillion. This brought total global assets invested in ETFs close to $9.5 trillion, more than twice their value as of the end of 2018, according to data from Morningstar.
Those inflows were great for BLK, and the stock gained more than 45% from March to November. Since its November 12 high, the stock has pulled back and has been consolidating, trading in a sideways range ever since.
The recent consolidation along with the company reporting fourth quarter results on January 14 is giving us an attractive trade set up.
I think BLK’s earnings are going to look really good, and shares will push higher. At this point though, it looks like traders are content to wait and see how the Q4 numbers play out before making a move in either direction.
That’s fine by me.
The lower volatility means options are less expensive, which of course, translates into higher potential profits.
If shares of BLK trade down to $875 before January 12, buy the BLK March 18, 2022 $880/$890 Call Spread for $4.95 or less. Plan on selling the trade for a 100% profit or if shares of BLK close below $860.
Alibaba Group Holdings Ltd. (BABA)
And finally, let’s watch BABA, the Chinese online retail giant, closely.
As of Friday’s early trading, shares of BABA had gained 21.1% over the previous seven sessions after dropping nearly 42% since it’s February 2021 high.
It was just a matter of time before the buy-the-dip bargain-hunting crowd turned its sights to BABA, but I think there are too many uncertainties (at this point) to take a long position.
As one of China’s biggest tech stocks, the company is still facing huge uncertainty regarding potential regulation as the Chinese Central Government flexes its muscle to reign in Chinese tech firms.
Add a slowing economy and rising COVID resurgences in China, and I think BABA might have a hard time growing gross merchandise sales volume (GMV), which, in turn, could lead to a revenue and earnings miss when the company reports quarterly results later this month.
If shares of BABA trade up to $140 by January 21, I like buying the BABA March 18, 2022 $125/$120 Put Spread for $2.25 or less. Plan on selling it for a 100% profit or if shares of BABA close above $155.